How did the ANZ share price manage to beat the other ASX 200 big-four banks in February?

ANZ shares have been relatively positive performers in February for one key reason…

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Key points
  • ANZ shares have outperformed the market and the banking sector in February
  • Although they are on course for a small decline, this is far better than its peers and the ASX 200 index
  • A strong start to FY 2023 has been the catalyst to this outperformance

The ANZ Group Holdings Ltd (ASX: ANZ) share price is on course to end the month in a subdued fashion.

The banking giant's shares are currently down 0.1% to $24.80.

However, unless something drastic happens in the final hour of trade, ANZ's shares are on course to significantly outperform the rest of the big four this month.

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Image source: Getty Images

The ANZ share price outperformance

As things stand, the ANZ share price looks set to record a monthly decline of approximately 1.1%.

While this is not exactly something to get investors excited, it is worth noting that the S&P/ASX 200 Index (ASX: XJO) is currently down 2.9% month to date.

Furthermore, compared to the rest of the big four, this is something to write home about. The next best performer in the group is the Westpac Banking Corp (ASX: WBC) share price with a 4.7% decline this month.

What's going on?

The catalyst for the outperformance of the ANZ share price has been the bank's strong start to FY 2023.

The market was expecting ANZ to fare well this year and this view was supported by the release of the bank's first-quarter update this month.

In response to the update, Goldman Sachs commented:

ANZ released its Pillar 3 disclosure for the quarter ended 31-Dec-22. Overall the update was slightly stronger that what was implied by prior 1H23 forecasts, driven by better volumes and asset quality remaining strong. 1Q23 CET1 ratio of 12.2% was 12 bp ahead of what was implied by our prior our forecasts.

Citi was equally positive and responded by naming ANZ as its top pick in the space. Its analysts commented:

ANZ's 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings, although subject to movements in deductions/reserves.

In light of this strong performance, Citi has put a buy rating and $29.25 price target on its shares. This implies potential upside of 18% for the ANZ share price from current levels.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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